What is header bidding?
Header bidding is a method of integrating multiple demand sources into the ad serving process of a website. It allows ad exchanges, supply-side platforms (SSPs), and demand-side platforms (DSPs) to bid on inventory (i.e., ad impressions).
The goal of header bidding is to allow publishers to maximize their ad revenue by giving more demand sources the opportunity to bid on their inventory, and to allow advertisers to bid on a larger number of impressions. It can also improve the user experience by reducing the number of ad calls and latency on the page.
How does header bidding work?
Traditionally, when a user visits a website, the ad server sends a request to the ad exchange to fill an ad slot on the page. The ad exchange then selects an ad from its inventory and sends it back to the ad server to be displayed on the page. If the ad exchange doesn’t reply with an ad, the exchange sends the request to another ad exchange until an ad is delivered. This is known as the “waterfall” approach, because it involves a sequential process of filling ad slots.
The waterfall setup works in the following way:
- A web page is loaded and the ad slots on the page are identified.
- The highest priority ad network, SSP, or DSP is given the opportunity to fill the inventory. If one of them is able to fill the inventory, the process stops and the ad is displayed.
- If the highest priority ad network, SSP, or DSP is unable to fill the inventory, the next one in line in the waterfall is given a chance to fill the inventory.
- This process continues until the inventory is filled or until there are no more ad networks, SSPs, or DSPs in the waterfall.
With header bidding solutions, the process is slightly different. It does not send a request to the ad exchange, instead it works in the following way:
- When a user visits a website, the ad server sends a request to the JavaScript code in the header of the webpage (the “header bidder”) to fill an ad slot on the page.
- A request is sent to multiple ad exchanges, SSPs, and DSPs simultaneously.
- Each of these platforms then has the opportunity to bid on the ad impression in real-time.
- The header bidder selects the highest bidder and sends the ad back to the ad server to be displayed on the page.
- The ad server serves the ad to the user’s browser, and the ad is displayed on the webpage.
How does header bidding help publishers?
- Increased revenue:
By giving more demand sources the opportunity to bid on their inventory, publishers can potentially increase their ad revenue. - Improved user experience:
Header bidding can reduce the number of ad calls and latency on the page, which can improve the user experience. - Greater control:
Publishers can customize the demand sources that they want to include in the header bidding process, allowing them to have more control over the types of ads that are served on their site. - Better targeting:
Header bidding allows publishers to access more data about their users, which can be used to better target ads and increase the relevance of the ads being served. - Greater transparency:
Header bidding provides greater transparency into the ad buying process, allowing publishers to better understand how their inventory is being valued and sold.
How does header bidding help advertisers?
- Increased reach and frequency:
By bidding on a larger number of impressions, advertisers can increase their reach and frequency. - Better targeting:
Header bidding allows advertisers to access more data about the users on the website, which can be used to better target their ads and increase the relevance of the ads being served. - Greater transparency:
Header bidding provides greater transparency into the ad buying process, allowing advertisers to better understand how their ads are being valued and sold. - Improved ROI:
By bidding on impressions in real-time, advertisers can potentially improve their return on investment (ROI) by targeting the most valuable impressions.
Header bidding vs. Google AdSense
Google AdSense is a program that enables website owners to display ads on their site and earn revenue through clicks or impressions. Header bidding, on the other hand, is a technique used by publishers to increase revenue from their ad inventory by allowing multiple ad demand sources to bid on their inventory simultaneously before making a final decision on which ad to display.
In other words, AdSense is a program that provides ads, while header bidding is a technology used by publishers to maximize revenue from the ads they display. The main difference is that AdSense is a product offered by Google, while header bidding is a technique that can be used with or without AdSense. Another important difference is in the reach of the respective solutions. If Google AdSense is described as a small pond, heading bidding would be an ocean.
Overall, while both header bidding and Google AdSense can be effective methods of integrating ads into a website, header bidding may be a better option for publishers who want to maximize their ad revenue, improve the user experience, and have greater control over the ad buying process.
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FAQ
Header bidding is a technique used by publishers to increase the yield on their advertising inventory. It involves allowing multiple demand sources (ad exchanges, SSPs, and DSPs) to bid on ad impressions in real-time, before the ad server makes a decision about which ad to display.
Traditionally, the ad server would make this decision based on a hierarchy of priorities, with the highest bidder getting the ad spot. With header bidding, all demand sources are able to bid on the ad impression simultaneously, leading to a more competitive process and potentially higher ad prices for the publisher.
Header bidding is implemented by adding a piece of JavaScript code directly or through a wrapper to the header of the publisher’s website. This allows communications with the demand sources and allows them to bid on the ad impressions as they become available. The winning bid is then passed back to the ad server, which makes the final decision about which ad to display.
Not necessarily.
Header bidding can be implemented using either a first-price or a second-price auction model, depending on the preference of the publisher. Some publishers may choose to use a first-price auction because it allows them to maximize revenue by capturing the full value of the winning bid, while others may prefer a second-price auction because it can lead to lower effective CPMs (Cost Per Thousand impressions) for advertisers.
Header bidding and open bidding are both methods of integrating multiple demand sources into the ad serving process of a website. However, there are a few key differences between the two:
- Timing:
Header bidding allows demand sources to bid on inventory before the ad server’s first look, while open bidding allows demand sources to bid on inventory after the ad server’s first look. - Bidding process:
In header bidding, demand sources bid on inventory in real-time, while in open bidding, demand sources bid on inventory using a second-price auction model. - Implementation:
Header bidding requires the integration of a JavaScript code into the header of the webpage, while open bidding can be implemented through a single tag that is placed on the page or through a direct connection in the ad server.
Overall, both header bidding and open bidding can be effective methods of integrating multiple demand sources into the ad serving process, but they differ in terms of timing, the bidding process, and implementation.
A header bidding wrapper (also known as a “container” or “integrator”) is a JavaScript code that manages the integration of multiple demand sources into the ad serving process of a website. It acts as a “middleman” between the ad server and the demand sources, allowing publishers to more easily manage and optimize their header bidding setup.
Here’s how a header bidding wrapper works:
- When a user visits a website, the ad server sends a request to the header bidding wrapper to fill an ad slot on the page.
- The header bidding wrapper sends the request to multiple demand sources simultaneously.
- Each of these demand sources has the opportunity to bid on the ad impression in real-time.
- The header bidding wrapper selects the highest bidder and sends the ad back to the ad server to be displayed on the page.
- The ad server serves the ad to the user’s browser, and the ad is displayed on the webpage.
The goal of a header bidding wrapper is to simplify the process of integrating multiple demand sources into the ad serving process and to allow publishers to more easily manage and optimize their header bidding setup.
Google has deemed header bidding as an ”existential threat” internally. However, it is not without its flaws and there are a few potential disadvantages for publishers:
- Complex implementation:
Implementing header bidding can be complex, as it involves integrating multiple demand sources into the ad serving process. This can be time-consuming and require technical expertise. - Increased competition:
By allowing multiple demand sources to bid on the same inventory, header bidding can increase competition among advertisers, which can drive up ad prices. - Limited support:
Not all ad servers and demand sources support header bidding, which can limit the number of demand sources that can participate in the bidding process.